Prospects never brighter for Pure Nickel

Current nickel prices may be the icing on the cake for rapidly growing Toronto-based Pure Nickel Inc.

As Nevada Star Resources Corp. joined the company in a reverse takeover this spring and became Pure Nickel, prices for the shiny metal hurtled skyward.

More than tripling in the past 14 months, nickel prices will remain under upward pressure this year, according to industry analysts. Booming demand, especially from China, will spur consumption to exceed production for a second consecutive year, causing nickel cash prices to soar. Spot prices on the London Metals Exchange closed May 18 at $24.56 a pound, up sharply from about $7 a pound when Pure Nickel was founded a year ago.

Since shareholders approved the Nevada Star deal March 27, the junior exploration company has hired world-renowned Metallic Minerals expert Larry Hulbert as its chief exploration officer; announced an $8 million-plus exploration program for 2007; and snapped up the 10-property Canadian exploration portfolio of Swiss mining group Xstrata Nickel for $15.3 million.

Pure Nickel also expanded by 400 percent its historic mining position in Southeast Alaska in April, with 143 claims now covering 2,200 acres at the Salt Chuck copper-gold-palladium-silver mine on Prince of Wales Island.

Publicly traded since March, Pure Nickel is listed on the Toronto Stock Exchange Venture Exchange under the symbol "NIC" and on the NASDAQ OTC Bulletin Board under the symbol "PNCKD."

"When we started the company one year ago today, we expected nickel prices to go to $10 a pound from $7 a pound," Pure Nickel Chairman and CEO J. Jay Jaski said May 18. "We started with one project and now we have 14 in some of the most prospective areas of the world. North America is an excellent place, and Alaska is a particularly good place to do business."

The sharp run-up in metals prices, especially for nickel, platinum and palladium, has created what Jaski called a "Perfect Storm" in the market, one that has enabled the company to raise money and execute deals quickly in a high-risk and high-cost but also high rewards business.

Still, rather than luck, Pure Nickel has grown rapidly by design, reflecting the company's "hard work," he added.

Company committed to drill MAN this year

For 2007, the company has committed to drilling on three projects: Fond du Lac Project (Saskatchewan); the Fox River Project (Manitoba); and the MAN Project near Paxson.

MAN, the largest of Pure Nickel's 100 percent owned properties at 210,000 acres, yielded grab samples with up to 15.4 percent nickel and 6.4 percent copper, recorded through assay, in previous exploration seasons. Nickel is in high demand in steel manufacturing and in making nickel-cadmium batteries for electric cars, according to Jaski

This year Pure Nickel aims to spend $4 million at MAN on a high-tech airborne geophysical survey, ground mapping, detailed soil and bedrock geochemical surveys and 4,000 meters of exploration drilling.

Geotech Ltd. of Aurora, Ontario will survey the Alpha, Beta and East Rainy complexes on the property. For the first time, explorers will investigate these intrusive bodies to depths down to 400 meters, the company said. Geotech's crew began surveying in early May.

L.E. Reed Geophysical Consultant Inc. of Rockwood, Ontario is currently conducting 3-D inversion modeling on the Alpha complex that will be combined with results of the new airborne survey and existing magnetic data to provide new insights into the prospect's mineralization.

In June, Mineral Exploration Services Ltd. of Reno, Nevada is set to begin geochemical sampling (1,063 samples) to help detail and define existing soil geochemical anomalies established in the 2003-05 programs (4,034 samples), and assist in further targeting of the 2007 drill program.

"The MAN project is now in an advanced stage of exploration, and we are very excited about the 2007 program since it will allow us to further refine and drill test our understanding on the controls and localization of magmatic Ni-Cu-PGE sulphides within these mineralized complexes," Hulbert said in a recent statement.

Surround area proposed for wildlife refuge

While MAN has never looked more prospective, a proposal to convert the surrounding Tangle Lakes area into a wildlife refuge came before the Alaska Board of Fish and Game in March and may create future problems.

The Fish & Game Board deferred the proposal until March 2008 and agreed to write a letter to the Alaska Departments of Natural Resources and Environmental Conservation "to raise the red flag on concerns about some of the area's wildlife populations such as caribou," said Kristy Tibbles, the board's executive director. Under state law, creation of a wildlife refuge is subject to approval of the Alaska Legislature.

Dick Mylius, director of DNR's Division of Land, Mining and Water, told the board that a wildlife refuge in the Tangle Lakes area that prohibited mining would infringe on the valid rights of owners of the area's existing mining claims and leave the State of Alaska vulnerable to takings claims.

"There's not enough money in the State of Alaska's coffers to compensate the mining companies for the value of all the minerals in the ground," observed one mining executive.

"If done right, a wildlife refuge would allow the owners of mining claims to take the subsurface minerals out, anyway," Mining Division manager Wyn Menefee said May 18.

For Jaski, the issue is one of corporate philosophy. "We should always leave places better than we found them," he said. "We want to be good citizens of the planet."

Palladium, which can absorb 900 times its volume of hydrogen gas, is used increasingly in manufacturing fresh water.

A recent airborne geophysical survey released by the State of Alaska shows more significant mineral potential at Salt Chuck. This summer Pure Nickel plans to do some soil geochemical sampling and possibly some ground geophysics work at the prospect, Jaski added.